AN EOQ MODEL FOR ITEMS WITH A FIXED SHELF-LIFE AND A DECLINING DEMAND RATE BASED ON TIME-TO-EXPIRY TECHNICAL NOTE

Tal Avinadav () and Teijo Arponen
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Tal Avinadav: Department of Logistics, Bar-Ilan University, Israel
Teijo Arponen: Institute of Mathematics, Helsinki University of Technology, Finland

Asia-Pacific Journal of Operational Research (APJOR), 2009, vol. 26, issue 06, 759-767

Abstract: This work presents an extension of the classical EOQ model for items with a fixed shelf life and a declining demand rate due to a reduction in the quality of the item in the course of its shelf-life. The demand rate, reflecting consumer preference for fresh items, is a polynomial function of the remaining time until the expiry date of the item. A mathematical model is developed to maximize the average profit per unit time, subject to shelf-life and marginal profit limitations. We prove that based on these limitations the model has a unique optimal solution and suggest a procedure for finding the optimal cycle length. A numeric example, including a sensitivity analysis, illustrates the model.

Keywords: Inventory; time-based demand rate; shelf-life; expiry date (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:26:y:2009:i:06:n:s0217595909002456

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DOI: 10.1142/S0217595909002456

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